I am struggling with a FIN 300 class. I have to take this class and pass in order to graduate. I don't get it. This is the problem that I am working on: Could you please explain each step that is taken to get the answer, because the book has the answers but I need to understand how those answers were reached and I am not following that.

Following operating structure:

Sales = 100

Raw material used in the business = 30

Direct production costs = 40

Administrative costs = 20

Operating cycle:

Raw materials inventoried = 15 days

Length of production cycle = one month

Inventories of finished products = 15 days

Payment terms:

Supplier 2 months

Customers 1 month

Others are paid in cash

ZERO VAT, calculate working capital in days of sales. The production cycle lasts one month, which means that in-progress inventories represent one month of raw materials and 15 days of production costs.

QUESTION IS ASKING TO CALCULATE WORKING CAPITAL IN DAYS OF SALES.

Here are the solutions to this question -

WORKING CAPITAL EQUIPMENT % of sales Time taken to

shift goods or

payment period

Here are the solutions to this question -

Working Capital % of sales Time taken to Value in

Component shift goods or days of

Payment period sales

Raw materials 30% 15 days 4.5 days

+Work in progress 30%x30days+40% X 15 days 15 days

+inventories

Of finished goods 90% 15 days 13.5 days

+Trade receivables 100% 30 days 30 days

-trade payables 30% 60 days -18 days

=Total 45 days

There are several ratios covered in the lesson but none that I can match to

These answers.